My wife and I are in a joint IVA and are in our 5th year which means in a few months CreditFix will be looking to release equity on our property. I'm unsure how this works and how you even release equity.
Our original debt is £62,000. We have paid £32,000 to date and have 10 months to pay until equity time.
According to Zoopla our property is worth approx £223,000. Our mortgage balance is currently £132,000.
I have 3 questions:
How does one release equity? Do you have to remortgage? How does all this work?
How much equity do we have on the property?
How much equity are we likely have to give to creditfix?
Most equity release is achieved by remortgage, within certain limits --- the new mortgage term cannot extend beyond the current term or state retirement age, whichever is later. the total of the new mortgage cannot exceed 85% LTV ( in this case around £190k) and the extra cost cannot exceed 50% of your IVA payment. Also the amount is limited to the balance of your original debt plus fees. Some newer arrangements also have an option that the same can be released by secured lending, subject to the same limitations. You have around £60k releasable equity.
To reach full repayments you would need to release around £40k .... but there is no way that the above limitations will allow anywhere near that figure to be raised.
All of the above is an over-simplification and you would really need to await Creditfix's calculations. Currently, at least from posts here, the more likely outcome will be a 12 month extension instead --- but the markets are changing all the time.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014 http://foggy.blogs.iva.co.uk